The Ministry of Justice has refused to discuss publicly its plans for CICA, which awards compensation on a sliding scale from £1,000 to a maximum £500,000. CICA made payments of about £244 million for the last financial year, an increase of £26 million on the previous 12 months.

The Ministry of Justice needs to make savings of about 23 per cent to meet its spending targets. It has long boasted that the CICA scheme is the most generous in Europe.

Sources have revealed that civil servants are examining cheaper schemes around Europe before committing to a new set of tariffs for victims of crime.

One option said to be on the table is to axe altogether payments to victims of more minor crimes such as common assault.

It is estimated that about half of all compensation is paid to victims suffering injuries which merit no more than £3,300 compensation.

The victim of an attack who suffers a sprained ankle is entitled to £1,000 compensation for the injury.

The Ministry of Justice has repeatedly refused to deny claims payments would be reduced.

In a rare statement, Mr Clarke said late last year: "We are going to have to look again to see how we can produce a system that works more efficiently, is actually affordable."

Lyn Costello, of Mothers Against Murder and Aggression, said: "We haven't a clue what's going on. Our concern is they are trying to slash payments, which are already not enough. Victims organisations haven't been consulted on this at all."

Neil Atkinson, the of the National Victims' Association, said: "Their entire history is predicated on a culture of trying to give victims the least amount of money they can get away with."

Sadiq Khan, the Shadow Justice Secretary, said: "It is simply wrong to leave victims and bereaved families in limbo. There is justifiable concern that their compensation will be cut. Rather than ignoring them, the Government should be straight with them.

"Victims of crime and terrorism should not be bearing the brunt of this Government's cuts."

British victims of terrorist atrocities committed overseas have also been left in limbo after discovering previously promised payments have been withheld, pending the outcome of reforms to the Criminal Injuries Compensation Authority (CICA).

The father of a man paralysed in the Mumbai attacks said he had been asked by Crispin Blunt, the Tory minister responsible for victims, "to stop lobbying" for compensation they had previously been promised.

Last week, Mr Blunt met with victims and their relatives of terrorist attacks committed overseas who were promised ex-gratia payments by the last Labour Government but have now been told to wait for the outcome of the review into CICA.

Thirty seven British victims of attacks abroad including the Bali bombings and the Mumbai shootings had promised payments, expected to total about £4 million.

Nigel Pike, whose son Will was left in a wheelchair and hoped to receive compensation of as much as £500,000, said: "When we met Mr Blunt I am surprised I didn't throttle him. He had the effrontery to tell us: 'you can stop your lobbying. Your argument is understood'."

In a sign of the sensitivity of the issue, Jill Greenfield, a partner at law firm Field Fisher Waterhouse who represents some of the victims, was invited to the meeting and then disinvited.

Last night a Ministry of Justice spokeswoman refused to be drawn on whether funding for CICA would be cut and whether British victims of terror overseas would ever receive payments - which previously had all-party support.

The spokeswoman said the review had been delayed for six months because the Ministry of Justice now planned a consultation following the publication of its review.

The spokeswoman said: "The Government recognises the suffering caused to the victims of crime and their families. We believe that support should be offered to the most seriously affected, most vulnerable and most persistently targeted victims.

"We announced last year a review of all victims support and intend to announce the outcome by the end of July.

As part of this review, we have been in constant dialogue with victims, support groups and the Victims Commissioner.

Any speculation as to what our proposals will be is highly premature and could cause unnecessary concern."